Canadian Dollar Falls as Oil Prices Slide and Hawkish Fed Worries Rise

The Canadian dollar slipped lower overnight due to softer crude prices and widening interest rate spreads between Canada and the US. WTI crude oil prices ticked up from recent lows, partly on speculation that Saudi Arabia may raise prices to offset higher shipping costs.

Traders are focused on Wednesday's FOMC outcome, with some concerned that Chair Warsh may take a hawkish stance as a way of demonstrating independence from Trump. However, analysts expect Warsh to lean on Powell-era inflation models and metrics, which suggest less severe inflation pressure than the standard metric implies.

The greenback is trading with a bid ahead of Wednesday's FOMC decision, driven by concerns about a hawkish outcome rather than renewed hostilities between the US and Iran. The US dollar index sat near 101.61, reflecting this unease.